Merchant Cash Advance (MCA)

Fast access to capital tied to business sales often with frequent repayments. Understand the trade-offs, total cost, and safer alternatives before you choose an MCA in the USA or Canada.

A merchant cash advance (MCA) is typically a purchase of future receivables (not a traditional loan) where a business receives funds upfront and repays through a share of sales or fixed daily/weekly withdrawals. MCAs can be accessible for some businesses, but they often carry higher total costs and can pressure cash flow if not structured carefully.

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An MCA may be considered when:

  • You need capital quickly for a short-term opportunity
  • You have consistent card or bank deposit volume
  • You can handle frequent repayment withdrawals
  • You have evaluated total cost and alternatives
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What Is an MCA (and How It’s Different From a Loan)?

A merchant cash advance provides upfront funds in exchange for a portion of your future sales or receivables.  Repayment is often collected automatically either as: A percentage of daily card sales (split funding), or Fixed daily/weekly ACH withdrawals from your bank account. Because MCA structures are different from traditional loans, pricing is commonly expressed using a factor rate and total payback amount rather than standard amortized interest.

“The most important numbers to evaluate are the total payback, the payment frequency, and the expected impact on cash flow.”

Common Repayment Structures

Split of Sales (Card-Based)

A portion of daily card sales is automatically withheld and sent to the provider. Payments move with sales volume.

Fixed ACH Withdrawals (Bank-Based)

A fixed amount is withdrawn daily or weekly from your business bank account, regardless of daily sales fluctuations.

Holdback

The holdback is the percentage of sales used in split funding structures. A higher holdback can increase cash flow pressure.

Typical Use Cases (and When It’s Risky)

When Businesses Use an MCA

  • Emergency repairs or urgent expenses with short timelines
  • Bridging a brief cash gap tied to sales cycles
  • Short-term opportunities with fast payoff expectations
  • Covering expenses when traditional options are unavailable

When an MCA Can Be Risky

  • Thin margins that can’t absorb frequent withdrawals
  • Long-term needs better suited for loans or lines of credit
  • Declining or inconsistent sales volumes
  • Stacking multiple advances, increasing repayment pressure
  • Unclear understanding of total payback and daily impact